HIGH‐LEVEL MEETING ON STRENGTHENING INTER‐ISLAND SHIPPING AND LOGISTICS IN THE PACIFIC ISLAND COUNTRIES

23‐25 July 2013

Session IV – Sustainable Maritime Transport

Trade Facilitation Issues in the Pacific(current engagement)

Shiu Raj

Director (Economic Governance Programme)

Pacific Islands Forum Secretariat

Outline of the Presentation

1. Core Trade Facilitation Issues

2. Trade Facilitation in the Inter‐Island shipping context

3. Trade in services commitments – Transport sector

4. Possible options for sustainable maritime transport

Key challenges

• Low trade volumes

• Mostly one way trade – both for international and domestic: empty containers!

• Port facilities provide limitations: size of vessels, type of loading/unloading gear, etc.

• The tyranny of long distances – geography

• Small populations, dispersed

Trade Facilitation ‐ Definitions• A number of definitions provided by International Organisations

WTO  and  OECD,  refer  to  trade  facilitation  as  :  “the  simplification  and harmonisation  of  international  trade  procedures  including  the  activities, practices and formalities involved in collecting presenting, communicating and processing data and other  information required for the movement of goods in international trade”

• The  shortfall  of  above  definition  is  it  does  not  address  other measures such as Non Trade Barriers (NTBs)

• Definition of TF applied within the context of Regional Trade Agreements (RTAs) refers mainly  to the scope/objectives of measures covered  in theAgreements.

• Trade Facilitation is referred to in PICTA, PACER, PACER Plus

Trade Facilitation – WTO context

• The  WTOs  definition  of  TF  includes  activities  such  as transport,  payments,  and  electronic  facilities  as  well  as issues related to customs and border crossing. This include documentation  requirements;  official  procedures; automation  and  use  of  information  technology; transparency; predictability and consistency.

• TF is covered by the relevant WTO articles as follows: GATT Articles  V,  VII,  VIII,  and  X  and  Agreements  on  Customs Valuation, Import Licensing, Pre‐shipment inspection, Rules of Origin, TBT and the application of SPS measures

• Singapore  Ministerial  Conference  (1996)  mandated  only GATT Articles V, VIII  and X be  considered  for multilateral negotiations

Trade Facilitation – GATT

• Article  V  relates  to  the  freedom    of  transit  of  goods  and transportation vessels across territories

• Article VIII  relates  to  the  fees and  formalities  related  to  the imports and exports  of goods

• Article X relates to the publication and administration of traderegulation (measures that ensure transparency)

• A number of cases have been brought  to  the WTO DSB  that involved  either  customs procedures or  technical  regulations and  fall  under  GATT  Art  VII,  VIII,  and  X  or  agreements  on licensing procedures, TBT, SPS, RoOs or customs valuation.

Trade Facilitation Agreement

• WTO Members agreed to consider Trade Facilitation Agreement (TFA) in 1996, but negotiations did not proceed until 2011

• TFA is a possible candidate for Bali package (Ninth Ministerial Conference – December 2013)

• FIC - WTO Members conducted their Trade facilitation Needs assessment in April 2013, which identified:

• (i) Measures in the TF Agreement they will be implementing upon entry into force of TFA;

• (ii) those measures requiring time or policy space; and• (iii) Measures requiring technical and financial assistances from the

Donor Partners –called Category C

TRADE FACILITATION AND LOGISTICS COST OF SHIPPING

• The TFA takes into account logistic cost that contribute towards the high shipping cost among the island countries.

• These logistic issues undermine PICs from integrating into the multilateral trading system, and benefiting from the International trade and commerce.

• The TFA aims to address the Administrative and customs related procedure cost associated with the clearance, release and transit of goods.

• Although all TF measures are important, our focus has been on measures in the TFA that constitute logistics cost affecting importation and exportation of goods at the sea ports.

MEASURES ADDRESSING LOGISTIC COSTS

• Publication of Information • Conformity tests – standards• Pre-arrival processing of goods• Electronic means of sending documentations• Release of goods prior to final determination of the customs

duties, taxes, fees and charges• Cooperation among Border Agencies, and also amongst

Ports, Customs, and Quarantine Authorities• Customs Procedures• Single Window - documentation and data requirement for

importation and exportation using single entry point

Key Trade Facilitation Issues

• Transport costs

• Transport options

• Standards and Conformance/Quality

• Consistency in supply/Volumes

• Sanitary and Phyto‐sanitary requirements

• Access to finance/research

• Market Access & Marketing

Trade in Services commitments

WTO Commitments: Fiji, PNG, Samoa, S.I., Tonga, Vanuatu

Pacific Island Countries Trade Agreement (PICTA) Trade in Services Protocol: commitments  focused on business services, tourism, transport, financial services, communications, education, construction, health, environmental, distribution and recreational services. 

Transport Services Sector under PICTA TISPO

• Transportation  is  an  identified  priority  sector. Commitments  under  PICTA‐TISPO  reflect  the  region’s desire  for  transport  sector  liberalisation  to  promote intra‐regional  trade,  and  social  and  economic development.

• Maritime  transport  continues  to  be  an  important facilitator of economic growth, but is often hampered by gaps  in  service and  infrastructure. Being  island nations, heavy reliance on maritime transport  for passenger and freight transportation. 

• The  evaluation  of  the  Schedule  of  Commitments highlights the prioritization of transport sector openness in the Pacific to some degree.

Maritime Transport Services commitments(under PICTA TIS Protocol)

1.  Low  level  of  commitment  for  both  market  access  and  national treatment  are  made  for  Pushing  and  Towing  Services.  Low  level  ofcommitment  in national treatment with medium  level of commitment in market access for Supporting Maritime Transport Services is offered. 

2. Medium  level  of  commitment  for  both  market  access  and  national treatment  is  currently  offered  for  Passenger  Transport  (International Only), Rental of Vessels with Crew, and Maintenance and Repair Services

3. High  level of commitment  is  currently  seen only  for Freight Transport Services.  It  must  be  noted  that  offers  to  liberalize  inland  waterway transportation is omitted by all FICs, with the exception of Kiribati

Air Services (under PIASA, and PICTA TISPO)

1.  The  stand‐alone  Pacific  Islands  Air  Services  Agreement (PIASA)  addresses  air  transport  liberalisation,  and  is  the region’s  effort  to  curtail  the  challenges  of  high  fares, inconsistent  schedules,  aircraft  leasing,  safety,  and commercial opportunities in the Pacific. 2.    Commitments  made  to  PICTA  TIS  complement  PIASA arrangements,  and  carry  the  potential  to  deliver  significant improvements  in areas  such as  code  sharing, pilot and  crew training, and fleet maintenance and repair. 

Transport Sector Liberalisation – Potential Benefits

•Previously inaccessible routes and areas can be serviced•Lower unit cost of transporting freight due to competition•Discontinuance of unprofitable routes•Increase in new international/ domestic routes•Investment/construction of new ports, roads, access points, inter‐modal hubs, harbours, terminals, storage facilities/warehouses, employment•Increase in local goods & services trading activities•Increased ability to service rural population with medicines, medical services, food, etc•Increase in local goods & services trading activities•Closure of uncompetitive businesses•Rise in cultural integration of regional nationalities

What has been done already?• Forum Principles on Regional Transport Services

• Pacific Forum Line

• Feeder Services – with signed declarations

• Regional Framework for Transport

• Some national Transport Frameworks

• Shipping Commissions

• Transport Sector assessments/independent evaluations

What are the lessons and how do we replicate good results?

Possible Solutions• What have we done with free/subsidised vessels and planes? Is there a lesson?

• Privatisation with strong regulatory mechanisms? Routes, Standards, Safety, etc.

• Can we survive without subsidy?

• Innovation in managing fuel costs – biofuel, wind/solar energy, 

• Port facilities and administration – capacity and efficiency

Possible Solutions

• Trade volumes: create trade in bulky products – liquids (water, oil, beer, etc.), copra, coconuts, etc

• Bulk breaking/Cargo Consolidation• Replace diesel with coconut oil?• ……

• Pacific Aid for Trade Strategy has identified ‘trade‐related infrastructure’ as a key priority! 

Thank You